How history judges the past year will depend on one key factor, whether changes are pandemic-driven anomalies or the emergence of a trend.
Meaning that the Financial Ombudsman Service’s annual complaints data and insight 2020/21 will offer an interesting snapshot in years to come.
For example, was the 58% rise in administration and customer service complaints about investments and pensions simply the result of people having more time to spend at home dealing with life admin?
Was it a reflection of the challenges companies faced trying to complete otherwise straightforward tasks in highly unusual circumstances?
Or has the administration and customer service genuinely gotten worse?
Mis-selling
While admin and customer service complaints can be triggered by a bad phone call or negative experience – mis-selling can often take years to come to light.
Which means the 44% rise in complaints related to ‘mis-selling – suitability of advice’ is less easy to directly attribute to covid-19.
Although investors could have used their abundance of free time to sit down and really assess their finances, uncovering issues and concerns.
Ultimately, a pattern will only emerge over time.
Fluctuating pension
Investments and pensions reported a staggering 91% increase in complaints, but this stems from the FOS changing the way it categorises complaints.
The inclusion of term assurance in the 2020/21 figures – which was previously classified as insurance – was the primary driver behind the rise in this category.
The most complained about product, however, was self-invested personal pensions (Sipp), which attracted 3,021 new complaints.
It also had the highest uphold rate across the category, at 56%.
This compares with the likes of mortgage endowments, whole-of-life assurance (critical illness only) and over 50s plans, which all had uphold rates of just 6%.
Ombudsman Nina Walter offered the following advice to product providers with a view to preventing future complaints.
“Consumers often don’t understand that their pension value is continuously fluctuating because it relates to underlying assets.
“Businesses could do more to explain this. For example, when requesting to take benefits, switch funds of transfer their pension, customers should be clearly informed that the value they will get might be higher or lower than when they make their request.
“Explanations of how a particular product or process works should be easily understandable for the lay person.”
Overview
The FOS received 454,259 new enquiries during 2020/21 – leading to 278,033 new complaints raised.
By category, this was broken down by:
- Banking and credit – 170,648
- Insurance – 44,487
- Investments and pensions – 20,854
- Payment protection insurance – 42,040
The overall uphold rate was 31% – rising to 40% if PPI complaints were excluded.
The FOS stated: “Complaints about investments and pensions made up just 8% of the new complaints we saw in 2020/21. Even so, these remain among the most high-value financial products people hold – and in the event of changes in their value, our experience suggests that clear communication can make the difference in preventing complaints.”
